SIE practice questionmediumClosed-End Funds
Shares of a closed-end fund may trade at a discount to NAV for which primary reason?
- AThere are no brokerage commissions
- BNAV is the same as the market price by law
- CFund managers must buy back shares
- DMarket supply and demand influences share price✓ Correct answer
Explanation
Why D — Market supply and demand influences share price
Closed-end fund shares trade in the secondary market, so supply and demand determine market price. That price may be above or below NAV, and the fund is not required to repurchase shares at NAV.
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